The number of families using a little-known loophole to beat Rachel Reeves's inheritance tax raid has nearly tripled, new data has shown.
In a bid to reduce their death duty payments, families are increasingly transferring money to their children via 'gifts out of surplus income', new HM Revenue & Customs (HMRC) figures obtained via Freedom of Information laws have revealed.
The amount of money transferred under such loophole increased from £52million in 2022-23 to a staggering £144million in 2023-2024, the Telegraph has reported.
The niche rule grants taxpayers the ability to give away unlimited funds without inheritance tax provided that the gifts do not diminish their quality of life and they derive from an individual's income, rather than from savings.
In order to be exempt, gifts must be made more than seven years prior to death. However, if a family can prove that the payments are made on a regular basis then that money is automatically made exempt and does not have to abide by the seven-year rule.
